1. IndiaNow
June - July 2010 | Volume 01 | Issue 2
EMERGING ENTREPRENEURS
GREEN BUSINESSES ARE THE
INDIA 21
B U S I N E S S
A TINY INDIA-MADE ELECTRIC
A N D E C O N O M Y
INNOVATION CORNER
SLEEK & SMART, A SNEAK
BUZZWORD CAR IS PACKING QUITE A PUNCH PREVIEW OF AN E-READER
THINK
BIG
THINK
SMART INDIA’S NEW
MANUFACTURING MANTRA

2. EDITORIAL VOLUME 01 | ISSUE 02 | JUNE-JULY 2010
www.ibef.org
EDITORIAL
Editor: Anuradha Das Mathur
Consulting Editor: Hemant Kumar
Winds of Change Managing Editor: Mahesh Ravi
Copy Editor: Rohini Banerjee
A determined new breed of DESIGN
Sr. Creative Director: Jayan K Narayanan
entrepreneurs leads Art Director: Binesh Sreedharan
Associate Art Director: Anil VK
the charge. Manager Design: Chander Shekhar
Sr. Visualisers: PC Anoop, Santosh Kushwaha
Sr. Designers: Prasanth TR, Anil T & Suresh Kumar
T he manufacturing numbers of any economy are among the clearest
indicators of its health. Manufacturing in India is showing the robust-
ness it has so painstakingly built over the years.
Chief Photographer: Subhojit Paul
Photographer: Jiten Gandhi
SALES & MARKETING
From a little-known producer of semi-finished items many decades ago, VP Sales & Marketing: Naveen Chand Singh
India has emerged as a serious manufacturer of high quality and globally National Manager-Events & Special Projects: Mahantesh Godi
competitive products. Industrial heavyweights from all over the world are Regional Manager (South): Vinodh K
moving into India, setting up manufacturing hubs here to not only service Regional Manager (North): Lalit Arun
the sizable domestic market, but also the entire world. Indian companies Regional Manager (West): Sachin Mhashilkar
are aggressively modernising and advancing in research and development,
PRODUCTION & LOGISTICS
bagging the prestigious Deming Awards, year after year.
Sr. GM. Operations: Shivshankar M Hiremath
Fifty years ago, India’s burgeoning population was seen as its heaviest
Production Executive: Vilas Mhatre
burden. Today, it has come to be understood as its greatest asset, whether as
Logistics: MP Singh, Mohd. Ansari, Shashi Shekhar Singh
a high-power, youthful resource, or an ocean of a market for products and
INDIA BRAND EQUITY FOUNDATION
services. People make the difference – educated, inspired and enterprising.
CEO: Aparna Dutt Sharma
If the last decade has been one of prolific growth, then the next one prom-
Project Manager: Priya Sahai Shirali
ises to be even more rewarding.
More importantly, the growth is moving in step with prudent, sustain-
able eco-consciousness. Entrepreneurs are saying: each of us affects the
environment a little; each of us, therefore, must help keep it clean. A young
entrepreneur from Bangalore nurtured a dream and scaled mountains of
struggle to give the world the all-green, world-renowned, commercially
successful REVA. Rag pickers climb smoking hills of discarded plastic at
Delhi’s landfills, and out comes a brand new material for European fash-
India Now—Business and Economy is a bi-monthly magazine published and
ion’s high street. That’s recycling at its sustainable best. printed by India Brand Equity Foundation (IBEF), Gurgaon. It is published at
249- F, Sector-18, Udyog Vihar, Phase- IV, Gurgaon – 122015, Haryana and
Admittedly, these are just local trickles, but not far from becoming a glob- printed at Silverpoint Press Pvt Ltd, D-107, TTC Industrial Area, Nerul, Navi
Mumbai – 400706. The magazine is edited by Anuradha Das Mathur, Nine Dot
al stream – the clear, gurgling stream of collective consciousness – more Nine Mediaworx Pvt Ltd., B-118 Sector 2 Noida – 201301, Uttar Pradesh.
India Now—Business and Economy is for private circulation only. Material in this
powerful than the strongest wave ever recorded. publication may not be reproduced in any form without the written permission
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Editorial opinions expressed in the magazine are not necessarily those of IBEF
and IBEF does not take responsibility for the advertising content, content
obtained from third parties and views expressed by any independent author/
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Email: info@9dot9.in
HEMANT KUMAR
www.ibef.org JUNE-JULY 2010
1

3. CONTENTS
VOLUME 01 | ISSUE 02
J U N E - J U LY 2 0 1 0
COV E R D E S I G N: SA M E E R K I S H O R
12
COVER STORY MNC WATCH
12 | Manufacturing A resurgent 10 | IN THE DRIVER'S
SEAT: HONDA INDIA
Well-timed entry into the market
economy, strong domestic demand with a bevy of world-class cars
and greater investor confidence mean helps the Japanese auto giant
move into cruise gear on
India is poised to be one of the greatest Indian roads.
manufacturing nations in the world.
ARTS & CULTURE
42 | SCULPTURE:
METALLIC SHEEN Delhi-
based master sculptor Sumedh
COPYRIGHT Published & printed by India Brand Equity Foundation (IBEF),
249- F, Sector-18, Udyog Vihar, Phase- IV, Gurgaon–122015, Haryana. India Rajendran transforms ordinary
Please Recycle Now–Business and Economy is for private circulation only. Material in this scraps of metal, wood and tile
This Magazine publication may not be reproduced in any form without the written permission
And Remove
Inserts Before of IBEF. into grand works of art.
Recycling
2 JUNE-JULY 2010 www.ibef.org

4. 39
INDIA 21
39 | ELECTRIC GREEN
A bright young Indian entrepreneur's electric car
REVA is an idea whose time has come as Europeans
take to it with zeal and commitment.
INNOVATION CORNER
36 | THE NEW LIFE OF PI
MIT alumnus Vishal Mehta of Ahmedabad develops
an affordable new e-reader that rivals the best in the
market. Now download and read e-books in a wide
12
20 range of Indian languages, from Assamese to Telugu.
EMERGING ENTREPRENEURS
REGULARS
20 | Seeding Green 01 | EDITORIAL
Innovation is the buzzword for the new 04 | ATIONAL ROUND-UP
N
Indian entrepreneur—the driving force 38 | ICROFINANCE
M
44 | OURISM UPDATE
T
behind the country’s march to greener 46 | OOKSHELF
B
pastures. 48 | URAL UPDATE
R
SECTORAL UPDATE 48 48 48
24 | IT: 27 | TELECOM: 31 | BANKING: 34 | AVIATION:
UPLOADED The second STRONG SIGNAL Brand GOOD BOOKS Clear CLEAR SKIES Steady
wave of success is coming, and new technologies like 3G and focus and astute financial growth and rising investment
the sector is gearing up for the ever-rising demand bode well planning help keep the Indian make India one of the world's
challenges and opportunities. for the Indian telecom sector. banking sector in robust health. fastest growing aviation markets.
www.ibef.org JUNE-JULY 2010
3

5. VOICE OF A VISIONARY
Unique number will
be the foundation
through which a citizen
National
can claim her rights
ROUND-UP
A Smooth Takeoff. Some of India’s airports DATA BRIEFING
make a big mark in the global aviation map as
the Airport Council International rates them.
DELHI'S INDIRA Gandhi International Airport has been
adjudged the “best improved airport” in the Asia-Pacif-
ic region and has been rated the world's fourth best
the Baltimore airport in the US topped the list. Hyder-
abad’s Rajiv Gandhi International Airport (RGIA)
has been rated the world's No 1 airport in the 1.5
10%
GROWTH
RATE PER
airport in the 2.5 crore passengers (approx) category. crore passengers (approx) category. The Hyderabad
Awards were announced recently by the Airport airport has also been voted as the fifth-best airport
ANNUM WILL
Council International, the apex body, which has 575 worldwide. RGIA is the second public-private partner- BE SEEN IN
members operating over 1,633 airports in 179 coun- ship venture among Indian airports, after the Cochin THE INDIAN
tries. The Council rated airports on 36 parameters International Airport. With one of the country’s lon- AVIATION
related to passenger amenities and infrastructure. gest runways (4,260 metres), the airport is designed to INDUSTRY IN
The Indira Gandhi International Airport received the handle 1.2 crore passengers, more than 100,000 met- THE NEXT 20
fourth-best airport award in the category of airports ric tonnes of cargo and 90,000 air traffic movements
handling 2.5 crore passenger traffic per annum while (ATM) per annum in the initial phase.
YEARS.
4 JUNE-JULY 2010 www.ibef.org

6. NAT I O NAL RO U N D - U P
THEY DR. D.
SAID IT SUBBARAO
The Reserve Bank of India (RBI) Governor, D. Sub-
barao, speaking at a recent conference held in Zurich,
Switzerland, admitted that among components of capi-
tal flows, India preferred long-term flows, to short-term
ones, and non-debt flows to debt flows.
“Our policy on equity flows
has been quite liberal, and
in sharp contrast to other
EMEs (emerging market
economies), which liberalised
More power, roads. The country and then reversed the
expects to add 20,359MW of power liberalisation when flows
generation capacity in this fiscal. became volatile, our policy has
THE PLANNING Commission has set targets to boost the country's infrastructure been quite stable.”
in this financial year, including adding 20,359 megawatt (MW) of power genera- —Dr. D. Subbarao, Governor,
tion capacity and 2,500km of highways, deputy chairman Montek Singh Ahluwalia Reserve Bank of India
was quoted as saying in the media. The Plan panel had set a 14,507MW target in
2009-10, while addition was 9,585MW. Similarly, the target for highways in the last
fiscal was 3,165 km, while 2,008km was completed. India has an installed power
capacity of about 160,000MW. The investment target for roads has been pegged at
INR 35,680 crore (US$ 7.6 billion) in 2010-11, higher than INR 29,934 crore (US$
6.4 billion) in the last fiscal, according to a report by the country’s premier news
agency Press Trust of India. The actual investment that came into the sector in the
last fiscal was INR 11,608 crore (US$ 2.5 billion). The country expects to increase
its infrastructure spending in the next five-year plan (2012-17) to $500 billion. By
2007, it is supposed to be doubled again, to $1 trillion. India's economy is expected
to grow 8.5 per cent in the fiscal year that began April 1, after expanding 7.2 per
cent in 2009 (provisional figure) making it the world's second-fastest growing
major economy, after China.
UPDATE ON RESEARCH
Greener Indian companies. India’s Tata Con-
sultancy Services, Bharti Airtel and Suzlon En-
ergy are among the global firms with high sus-
tainable development standards, a report by
Swiss lender Bank Sarasin showed. The study,
conducted among 360 emerging market com-
PHOTO: PHOTOS.COM
panies, found that a third of these firms have
a high rating in terms of sustainability.
www.ibef.org JUNE-JULY 2010
5

7. NAT I O NAL RO U N D - U P
SOUND BITES
Bench-
mark-
ing on a
global scale is the
only way to com-
pete internationally.
And to achieve this,
Indian companies
must have an export
orientation.
PHOTO: PHOTOS.COM
-N.R. Narayana Murthy, Chief Men-
tor, Infosys Technologies Limited
ILFS plans ‘long’ bonds. The We have
instrument will be similar to the US’ to be pre-
Treasury Bond. pared for a
three-digit increase.
INFRASTRUCTURE Leasing raise long-term fund through vide enough liquidity and an
Financial Services will launch an instrument on the line of the exit route to the investors. These Crude oil prices are
“long bonds” with a maturity
period of 25 years, a move that
US long bond for those projects
which have residual conces-
market makers will give two-
ways quote for the instrument
well above the $70-
will set a new trend in the sion period of 25 years, ILFS that will be listed on Indian mark… the petro-
corporate bond market, said a chairman Ravi Parthasarthy was bourses. ILFS will also be one
report in the Economic Times. quoted as saying in the report. of the market makers.
chemical industry
The instrument will be simi- Long-term securities, such as Since there is no corporate will have to keep
lar to the US’ Treasury Bonds long bonds with 25-year maturi- bond market in the country, the
or long bond ties, are often company is looking at introduc- reinventing itself.
with a maturity tough to sell. ing such instruments under the -Mukesh Ambani, Chairman,
from 20-25 years
and coupon
ILFS will Unlike the short-
er-dated securi-
prevailing guidelines, which
will have enough liquidity so
Reliance Industries Limited
payment every raise INR ties, a bond with that investors even with short-
six months like
short duration
5 crore maturity period
of 25 years or
term funds can participate, the
chairman was quoted as saying.
Talent
treasury bonds. through this more appeals to ILFS will raise around INR acquisi-
The instrument,
which will be
route. It is a much smaller
group of buyers
500 crores (US$ 107 billion)
through this route. The com- tion, trans-
rated by credit in talks with as it needs long- pany has already started discus-
formation and
rating agencies,
will work on the
investment term investors’
commitment, it
sions with investment bankers,
the report said. “The company management are
model of the bankers. said. will appoint four investment
critical anchors for
erstwhile US-64 However, bankers including three foreign
of the Unit Trust ILFS is plan- banks and one domestic for the the growth of an
of India, said the report in the ning to appoint at least two or proposed issue,” another com-
Economic Times. even three market makers for pany official involved in the dis- industry.
The company is planning to the instruments, who will pro- cussion was quoted as saying. -Nandan Nilekani, Chairman, UIDAI
6 JUNE-JULY 2010 www.ibef.org

8. NAT I O NAL RO U N D - U P
UPDATES
IT SERVICES
INDUSTRY
UPDATE Paris-based IT services
and consulting firm
Capgemini plans to hire
India, US reach agreement. New Delhi more than 4,000 people
can tax 17.5 per cent of the profits earned by for its India operations
PHOTO: PHOTOS.COM
in this quarter. Its India
Indian units of the US companies in 2004-05. headcount stood at 23,353
INDIA has settled a disagreement over organisation. TP rules check an MNC at the end of March,
taxing profits of captive Information from shifting profits out of India. The making India one of its
Technology services units and research report added that Article 27 of the tax largest centres; its India Its Raining Jobs: French firm
arms of US firms, bolstering New treaty between India and the US provides headcount grew by over Capgemini will be on the
that a firm, which has suffered from a lookout for 4000 new faces
Delhi’s position as a preferred destina- 5 per cent in January-
for its India operations.
tion of such investments, said a report potential double taxation, can seek relief March.
in the Economic Times. through the competent authority under
According to the report, the negotiated the mutual agreement procedure (MAP). The finance ministry plans
settlement between the tax “Most multinationals
to form a core group of tax
30%
authorities of the two coun- view transfer pricing as
tries allows India to tax 17.5 a tug of war between tax officials for rolling out
per cent of the profits earned authorities and a MAP
by Indian subsidiaries of the
OF PROFITS FROM
resolution ensures that the GST by April next year.
US companies in 2004-05. taxpayer does not suffer
India had sought to tax 25 CAPTIVE IT SERVICE economic double taxation,”
to 30 per cent of the profits. UNITS WOULD Vijay Iyer, partner at con-
BOOK PREVIEW
“This is a significant develop- sulting firm Ernst Young,
BE CUT FROM US
ment,” the daily quoted an was quoted as saying by the AWAKENING
official with the income-tax SUBSIDIARIES newspaper. GIANTS: FEET
department as saying. The Several multinational OF CLAY
government could gain about INR 400- companies have set up their IT and
500 crore (US$ 107 million) in revenues, research facilities in the country Pranab Bardhan’s book focus-
the report said. Though the transfer pric- thanks to the availability of high- es on the economic develop-
ing (TP) settlement is binding only for quality technical manpower and low ment of India and China in term institutional and politi-
transactions in 2004-05, this would serve labour costs. American companies the past quarter century. It cal-economic issues in these
as a reference point in future disputes, such as GE, IBM, Dell, Accenture, JP investigates the two coun- fast-growing economies.
it added. TP refers to the valuation of Morgan and American Express have tries’ economic reforms and India release not announced.
contributions by way of assets, services, large establishments in India, said composition of growth. It also PRINCETON UNIVERSITY
and funds changing hands within an the report. puts the spotlight on long- PRESS
SHARE TRACKER
years entails a total invest- tions have been accepted by
Road regulator expects ment of INR 8 lakh crore
(US$174 billion), of which
the Centre, has also given its
nod to NHAI's plan to award
to be debt-free. The market borrowings will be projects of 37,000 km. The
authority plans to mobilise INR INR 1.2 lakh crore (US$25 bil- plans will be executed in five-
40 billion in the current fiscal. lion), the Business Standard
reported. NHAI chairman ing: “The government has
six years.
It quoted Dash as say-
THE NATIONAL H i g h w a y s infrastructure bonds, term Brijeshwar Singh said the already given in-principle ing that NHAI expected to
Authority of India is plan- loans, and loans from mul- estimated size of borrowing clearance to the investment be debt-free by 2030-31 and
ning to use multiple instru- tilateral agencies, banks and would be INR 100-200 bil- plan. However, NHAI will added the authority, raised
ments to raise funds. Plans financial institutions, said a lion annually for the next 15 have to seek its approval on about INR 14 billion (US$ 300
include capital gains tax report. The planned construc- years. Nihar Ranjan Dash, a case to case basis. Besides, million) in 2009-10 through
exemption bonds, external tion of another 37,000km chief general manager, was the BK Chaturvedi Commit- capital gains tax exemption
commercial borrowings, of roads over the next four quoted by the daily as say- tee, whose recommenda- bonds.
www.ibef.org JUNE-JULY 2010
7

9. INDIA $ 14.2
WATCH
billion
revenues
from India’s
3G auction
Area Population Male Female Population Density Urban Population
3,287,590 sq km 1.133 bn 600884425 523601762 359.14 340 million
Key performance ECONOMIC PROSPECTS FOR 2010
indicators of the India’s Economic Outlook Projection
Indian economy, with Fiscal Year 2007 2008 2009 2010
patterns, trends and GDP Growth
CPI
9.40%
6.40%
7.30%
9.30%
5.40%
5.50%
7.20%
4.90%
forecasts Source: Data taken on 7th May,2010 from RBI website
Mean Probability Pattern of Real GDP Growth Forecasts
45%
For the year 2009-10, the
40%
forecast for agriculture has 2010-11
35% been revised downwards
from 3 per cent to 2.5 2009-10
30% per cent. For the industry
and services sectors,
25%
the forecasts have been
20% revised upwards from 4.1
per cent to 4.8 per cent
15% and from 7.5 per cent to
8.3 per cent, respectively
Source: RBI
10%
5%
0%
Below 3 to 3.5 to 4 to 4.5 to 5 to 5.5 to 6 to 6.5 to 7 to 7.5 to 8 to 8.5 to 9 to 9.5 to 10 to 10.5 to 11% or
3% 3.4% 3.9% 4.4% 4.9% 5.4% 5.9% 6.4% 6.9% 7.4% 7.9% 8.4% 8.9% 9.4% 9.9% 10.4% 10.9% More
Chart 1: Year-on-Year Growth IIP Chart 2: Year-on-Year Growth in Sectoral Indices
20% 20%
18%
16% 15%
14%
12% 10%
10%
8%
5%
6%
Source: CSO
Source: CSO
4%
2% 0%
0%
-2% -5%
6
7
8
9
6
7
8
9
06
06
09
09
06
06
09
09
08
08
07
07
08
07
07
08
r-0
r-0
r-0
r-0
r-0
r-0
r-0
r-0
g-
c-
g-
c-
g-
c-
g-
c-
g-
g-
g-
c-
c-
g-
c-
c-
Ap
Ap
Ap
Ap
Ap
Ap
Ap
Ap
De
De
De
De
Au
Au
Au
Au
Au
Au
De
De
De
De
Au
Au
Mining Manufacturing Electricity
8 JUNE-JULY 2010 www.ibef.org

10. I N D I A WATC H
Chart 3: Contribution to IIP Growth 4500
Chart 4: FDI FII Inflows
in March 2010 4000
14% 3500
12% 3000
Electricity Non-Durables,
0.6% 0.8% 2500
10%
Durables, 2000 FII
8% 2.5%
1500
6% Manufacturing Intermediate 1000 FDI
12.1% 3.1%
500
4%
Source: CSO
Capital,
Source: RBI
0
4.2%
2%
9
9
9
9
9
0
09
9
10
500
9
09
00
00
00
00
00
01
00
Mining
00
Basic,
-20
-20
-20
y-2
g-2
p-2
v-2
c-2
b-2
t-2
r-2
0.8% 2.9%
Jun
Jan
Jul
0%
Oc
Ap
Ma
No
De
Au
Se
Fe
Cash Reserve Ratio RBI Policy Rates
6 6
5.8 5
5.6
Cash Reserve 4 Repo Rate
5.4 Ratio
3 Reverse
5.2
Repo Rate
5 2
4.8 1
4.6
0
Source: RBI
Source: RBI
May-2009
June-2009
July-2009
Aug-2009
Sept-2009
Oct-2009
Nov-2009
Dec-2009
Jan-2010
Feb-2010
Mar-2010
April-2010
7, May-2010
May 2009
June 2009
July 2009
Aug 2009
Sept 2009
Oct 2009
Nov 2009
Dec 2009
Jan 2010
Feb 2010
Mar 2010
April 2010
7,May 2010
20 Manufactured Products
Fuel Power Light Lubricants
Monthly trends in 15
Wholesale Price Primary articles
Index- monthly 10 All Commodities
average (% change)
5
0
Source: RBI
-5 Jan Feb Jan Feb
2008 - 09 2009 - 10
STOCK MARKET CURRENCY EXCHANGE RATE
Date BSE Sensex % Change SP CNX NIFTY %Change Date INR/USD INR/GBP INR/JPY INR/EUR
1.12.09 17198 11.6 5122 12.2 Sep 09 48.82 79.73 53.39 71.03
4.01.10 17558 2.1 5232 2.1 Nov 09 46.74 77.54 52.40 69.64
Jan 10 46.18 74.60 50.55 65.96
1.02.10 16356 -6.8 4900 -6.4
Source: RBI
Source: RBI
Mar 10 45.50 68.53 50.25 61.80
2.03.10 16772 2.5 5017 2.3 May 10 45.08 68.09 48.23 58.75
www.ibef.org JUNE-JULY 2010
9

11. M N C WATC H HONDA SI E L CARS I ND IA LTD
COMPANY
DASHBOARD
FIRST CAR IN
INDIA: Honda City
ESTABLISHED (IN
INDIA): Dec 1995
EMPLOYEE
STRENGTH:
3,394 associates
SALES VOLUME:
61,185 (April 2009
to March 2010)
MANUFACTURING
UNITS:
Greater Noida, UP, and
Tapukara, Rajasthan
DRIVEN TO
SUCCEED
The journey so far has been smooth and Honda
knows that the road ahead is even better—consis-
tent growth has led the company to invest more,
and expand its service network. As the firm readies
to launch its first world-class concept car in India,
its confidence shows. BY SHREYASI SINGH
10 JUNE-JULY 2010 www.ibef.org

12. HONDA SI E L CARS I ND IA LTD M N C WATC H
G
G
LOBAL AUTO giant Honda couldn’t have better of the Year. The model has won awards for its engine performance,
timed its entry strategy to India. It’s an advantage they reliability and design.
have profitably leveraged, as the company is now the car Honda knows that the Indian car market will continue to grow.
manufacturer of choice across several automobile seg- Right now, only eight in every 1,000 Indians own cars, as against 800
ments. “The Indian automobile industry was at a growing stage when in every 1,000 Americans. While the numbers are good for compari-
Honda entered India. We anticipated the growth prospects of the son, they also suggest that the American market is saturated, and
industry when there were not too many international brands available the potential for the growth of the Indian market is tremendous.
for the Indian customer,” says Jnaneswar The cost competencies in India also make
Sen, vice president (marketing), Honda Siel it a better investment option for companies.
Cars India. “In fact, India has emerged as an automo-
Honda Siel Cars India Limited (HSCI) tive hub and favourite investment destina-
was incorporated in December 1995 as a tion for global automobile manufacturers,”
joint venture between Honda Motor Com- says Sen.
pany Limited, Japan, and Siel Limited, a The Indian market is also considered to
Siddharth Shriram Group company, with be more stable than most parts of the world,
a commitment to providing Honda’s latest showing profits, growth in figures and ris-
passenger car models and technologies to ing sales even during the slowdown.
Indian customers. Over the past decade- HSCI says this indicates that the funda-
and-a-half, the company has made an mentals of their business are in shape here.
investment of INR 2,4000 crore (US$527 Their journey has been a positive case
million) in India. “Consistent growth has study for several companies who have simi-
made us invest more, extend our product larly forayed into India.
offering, and expand our service network Several European and American car man-
here in India,” adds Sen. ufacturers have followed Honda’s instinct
HSCI set up its first unit at Greater Noida, INDIAN about the Indian market.
UP, in 1997.
Spread over 150 acres, the green-field AUTOMOBILE For them, Sen has some useful advice.
“Indian customers are smart buyers and
project has a capacity of 100,000 cars. Its
second plant at Tapukara, Rajasthan, went
INDUSTRY WAS are aware of the new products and tech-
nologies. We were able to capture the
online two years ago. Occupying 600 acre AT A GROWING mindset of evolving and discerning Indian
of land, it has a capacity of 60,000 cars. The
combined investment in the two projects STAGE WHEN customers and responded by offering our
latest global products at regular intervals
exceeds INR 24,000 crore (US$5.2 billion).
Rising sales are driving the investment.
HONDA to suit their requirements. We are com-
mitted to introducing the latest technol-
Last year, Honda sold nearly 62,000 cars, 18 ENTERED. WE ogy products for our Indian customers,
per cent more than the previous year. The
company has a strong sales and distribu- ANTICIPATED and we take their feedback regularly to
improve our customer-service levels.”
tion network across 70 cities. From the new
small car, Jazz, to the popular City, and
THE GROWTH In fact, HSCI unveiled its new Small
Concept Car at the Tenth Auto Expo in New
luxury sedans Civic and Accord, Honda has PROSPECTS OF Delhi, earlier this year.
a car for every segment.
“We have introduced some of our best THE INDUSTRY Still being developed, the new car is the
concept model of a small-sized vehicle,
global products in the Indian market. We
entered the market with the Honda City,
WHEN THERE especially for India and other emerg-
ing nations. It is pegged to be a true
which became the best-selling sedan,” says WERE NOT Honda—running on a futuristic design
Sen, adding that the sedan has defined
the company’s journey in India. Since its MANY CHOICES. with maximum cabin space. It is for the
first time that Honda has chosen India for
launch in 1998, the Honda City has main- —Jnaneswar Sen, the world premiere of a concept car, in
tained its bestseller position in the premi- Vice President, Marketing, what is a clear indication of its continuing
um car segment. It was 2009’s Indian Car Honda Siel Cars Limited confidence in the Indian market.
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11

14. COVE R S TO RY
ThinkBig
ThinkSmart
I
Placing the ndia is one of the top 20 global powerhouses of manufacturing. It is easy to see
why.
customer first, Indian The right products and processes; an environment that promotes capital
engineering; long history of manufacturing; a solid higher education sys-
manufacturers are tem, and cheap and skilled manpower.
Having grown at nearly seven per cent annually over the last decade,
redefining processes, India's manufacturing sector is now the 13th largest in the world, accord-
harnessing their
ing to a recent CII-BCG report. What’s more, the report predicts that
India can jump to fourth place, if its assets grow, exports rise and the produc-
workforce, and making tivity of labour increases in the next 15 years. By 2025, India’s assets would
need to rise by almost INR 80 lakh crore (US$ 1.7 trillion) and exports, by
India attractive for nearly 20 per cent, the report adds.
It is easy to gauge why manufacturing is so integral to the Indian econo-
global manufacturers my—half of all exports come from this sector that employs 12 per cent of the
total workforce, and contributes 15 per cent to the nation’s GDP.
and investors. The government has said that it will announce a national manufacturing
BY DEBASIS SEN policy by August, this year. The right policy measures and the private sector’s
credit growth can help the GDP rise by 9.5 per cent this year itself. This would
mean producing many more manufacturing champions – increasing the
number of companies and raising annual revenue.
But the news is good so far. Indian manufacturers have been in an innova-
tion mode—to raise operational efficiency, add new features and meet con-
sumer needs. They have raised the quality bar for goods.
Ravi Kant, Vice Chairman, Tata Motors, explains, “By lowering interest rates
and improving the efficiency of capital markets, the government has turned
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13

15. COVE R S TO RY
India into an attractive business destination.
Then, there are young entrepreneurs with
a global vision and a growing middle-class
with more money to spend.”
A LARGE AND GROWING DOMESTIC MARKET
O
ver 300 million Indians (63 million households) are expected to have a household
From local to global income of over $6,000 by 2015. India is experiencing a rapid growth in consumer
Once considered its weakness, India’s spending. The economic reforms since the early nineties have unleashed a new
burgeoning population is now transform- entrepreneurial spirit, creating a vibrant economy supported by rising per capita income.
ing into one of its greatest strengths. As The average Indian can adapt to global trends, thanks to rapidly-growing disposable
a result, investors are eyeing India for its incomes and easily available consumer finance. This has created one of the world’s
demographic dividend. It is estimated that largest markets for manufactured goods and services.
its employable population will rise by 70 per Growth in key sectors like infrastructure, services and manufacturing continues at
cent by 2030, the highest such rise in the about 10-12 per cent per annum.
world. More than 2.5 million graduates join The market for basic goods such as groceries and textiles is already large, driven by
its workforce every year. By 2015, the num- the demands of an enormous population. Markets for other products are equally large,
ber will touch 70 million, accelerating the and growing rapidly.
transition from teeming millions to ready Over 225 million telephone subscribers, growing at more than 75 million per annum.
resource. O
ver 8 million TV sets and 4 million refrigerators are sold annually and expected to
An Investment Commission of India grow at 20 per cent per annum.
report talks about a set of industries that will T
otal production of vehicles crossed 14 million (and more) in 2009-10, up from 2.3
collectively boost growth and expand invest- million in 1998-99.
ment opportunities by earning more than India has been ranked first by AT Kearney in a Global Retail Development Index
180 billion dollars. The industries are: steel of 30 developing countries.
and aluminium, textiles and garments, elec- —SOURCE: INVESTMENT COMMISSION OF INDIA
tronic hardware, chemicals, automobiles,
auto components, and gems and jewellery.
Dilip Chenoy, CEO and MD, National pilgrimage to India is powered by the rise Today, it exports nearly 300,000 cars each
Skill Development Corporation, NSDC, of the Indian middle-class and the grow- year. Suzuki's plant at Manesar, near Delhi
says: “The time is ripe for us to become a ing economy. serves as its global hub for small cars. Nokia
manufacturing destination.” The stagnating auto markets of the US, uses its plant at Sriperumbudur in Tamil
Global manufacturing giants like Nokia, Europe and Japan, have only accelerated the Nadu, to export mobile handsets to 50 coun-
LG, Motorola, Samsung, Hyundai, Ford, pull. The preference is expected to continue, tries, though the MNC has nine factories
Suzuki, GM, JCB and Caterpillar, ABB, Sch- as more companies taste success. Global located in Brazil and South Korea, too.
neider, Honeywell and Siemens, have set up consultancy firm, Deloitte, says that by Recently, the chairperson and CEO of GE,
shop here. Though they began with the idea 2020, at least one Indian company will be Jeffrey Immelt, announced the company's
of servicing the local market, most found among the world’s top-six car makers. intention to enter the Indian market—both
facilities strong enough to support and serve Hyundai Motors entered the India market for local consumption and export. “Not
the overseas markets. in 1996. It set up a plant near Chennai for surprising,” says NSDC’s Chenoy. “Indian
In the automobile sector, the investors' small cars. manufacturing will grow through a combi-
nation of domestic demand and skill-driven
A Credit Suisse export competitiveness,” he explains.
If the trend continues, Americans may
Group study predicts soon buy an SUV designed and built in
India. Mahindra spent $120 million to
that consumption design the Scorpio. The company now plans
will continue to grow to launch a version of the four-cylinder,
diesel-powered vehicle in the US, via a
by 16 per cent for the partnership with Global Vehicles, USA. The
company says that more than 300 dealers
next two years, have already signed up to sell the vehicle.
fuelled by the $1 The impetus will come from other quar-
ters, too. Reliance Industries’ three-year
trillion construction old Jamnagar complex combines a petro-
leum refinery and petrochemical plants. It
projects, nation-wide. manufactures a range of fuel from simple
14 JUNE-JULY 2010 www.ibef.org